Fund of Funds II

darkpool

gadgetmind wrote: »

None of my threads that are pro-passive and (vaguely) anti-active have been pulled. Just saying.

i get your point, but does my posting style cause debate?

darkpool

Aegis wrote: »

The threads that get pulled get pulled for a reason, and that reason is usually because there's a lot of foaming-at-the-mouth style attacks which aren't backed by critical thinking or evidence. We all know which posters are responsible for those...

Despite what people say here, I am a rational person that can evaluate evidence with a keen mind. It's just so far the bulk of academic evidence, that i have seen, suggests to me that paying for fund management is not worth it.

Have you any evidence that shows active management is worth the fees? If you do why do you not post it here?

Lokolo

darkpool wrote: »

Despite what people say here, I am a rational person that can evaluate evidence with a keen mind. It's just so far the bulk of academic evidence, that i have seen, suggests to me that paying for fund management is not worth it.

Have you any evidence that shows active management is worth the fees? If you do why do you not post it here?

Many people have given many examples of funds that out perform the benchmark. An example here.

Investors do not pick out of a hat, yes, if they did your argument would be fool proof, but as investors we do not. We pick funds based on our objectives, on our views, geographical area etc. so we will look at active funds to beat the benchmark. Just like individual shares, we don't just pick out of a hat, we pick based on the same views as our funds - opinions and objectives.

Even gadget has said that he also invests in the above fund, even though he is very pro passive investing.

darkpool

Lokolo wrote: »

Many people have given many examples of funds that out perform the benchmark.

i can give examples of people that have won the lottery, does that mean people should invest their life savings in lottery tickets?

there are also many many funds that have lost money. why should your sample of well performing funds be considered any more representative than the duff funds?

you'd really need to consider the performance of the average fund....... and they have, and the conclusion was that active management was not worth the fees.......

Lokolo

darkpool wrote: »

i can give examples of people that have won the lottery, does that mean people should invest their life savings in lottery tickets?

there are also many many funds that have lost money. why should your sample of well performing funds be considered any more representative than the duff funds?

you'd really need to consider the performance of the average fund....... and they have, and the conclusion was that active management was not worth the fees.......

Why do I?

As I said, I am NOT PICKING OUT OF A HAT, so why should I be looking at the AVERAGE (which is what picking out of the hat would statistically give me)?

If I am researching a car and I want to look at high performance, why would I look at the average performance of all cars? I wouldn't.

I am not saying that overall managed funds are better than trackers, neither am I saying that managed funds are worse than trackers. I don't care what the average is, I am not looking for the average. Why don't you get that?

Are you honestly saying - when you invest, you pick out of a hat? You quite happily choose blind, aiming for the average?

darkpool

Lokolo wrote: »

Why do I?

As I said, I am NOT PICKING OUT OF A HAT, so why should I be looking at the AVERAGE (which is what picking out of the hat would statistically give me)?

If I am researching a car and I want to look at high performance, why would I look at the average performance of all cars? I wouldn't.

I am not saying that overall managed funds are better than trackers, neither am I saying that managed funds are worse than trackers. I don't care what the average is, I am not looking for the average. Why don't you get that?

Are you honestly saying - when you invest, you pick out of a hat? You quite happily choose blind, aiming for the average?

ok, what abilities do you have that the millions of other UT investors don't have? how can you decide which UTs will outperform when you only have the exact same information as every other UT investor?

if you do believe in the ability of fund managers why do you not pick a fund of funds? they must have a higher ability to pick winning UTs than you?

i pick shares that i believe will be in existance in 50 years time, i also like low PEs. that's how i decide what to buy.

PS how many UTs have you got?

JamesU

Lokolo wrote: »

Why do I?

As I said, I am NOT PICKING OUT OF A HAT, so why should I be looking at the AVERAGE (which is what picking out of the hat would statistically give me)? If I am researching a car and I want to look at high performance, why would I look at the average performance of all cars? I wouldn't. I am not saying that overall managed funds are better than trackers, neither am I saying that managed funds are worse than trackers. I don't care what the average is, I am not looking for the average. Why don't you get that? Are you honestly saying - when you invest, you pick out of a hat? You quite happily choose blind, aiming for the average?

I do not understand your logic.

If you choose to buy a car that has high performance (and hence pay a higher cost as a result) you pay for that guaranteed performance and get it. If you choose a fund with a high cost it is not guaranteed that the fund will have a higher performance in the future. You are not picking out of the hat with the car, but your are picking out of the hat with the fund. That seems to be a point other posters often make in the active vs passive debate, and this analogy with cars looks daft to me.

JamesU

Ilya_Ilyich

Supporting active single-sector fund management while not supporting funds-of-funds isn't inconsistent, it's a simple cost-benefit comparison. You may believe for example that a skilled fund manager can deliver on average 2% higher returns on his mutual fund and thereby justify a 1.5% TER, but that even a skilled FoF manager might only be able to add 0.3% and therefore not justify a management charge of 0.4%.
Picking funds is a different skill to picking individual stocks and it's perfectly reasonable for someone to believe that stock-picking skill deserves a premium while fund-picking doesn't.

Linton

The main advantage of chosing specific funds is because you can choose what sort of things to invest in. Go for a tracker and you are guaranteed to have most of your money invested in the largest companies in a broad market. Not necessarily the most efficient, nor the ones with the most convincing growth strategy, nor the ones that provide the portfolio balance you want, simply the largest.

So take the FTSE100 (the FTSE All Share is much the same), for every £100 you put in a tracker perhaps 35% (data from june 2011) goes into raw materials extraction - mining/oil/gas. I may like the riskier end of the market but 35% in raw materials does not seem like a sensibly balanced portfolio to me. Put that against 5% in industrials and 1 % (yes 1% !!) in technology sector shares. Would anyone constructing a portfolio choose shares in these proportions?

darkpool

Linton wrote: »

The main advantage of chosing specific funds is because you can choose what sort of things to invest in. Go for a tracker and you are guaranteed to have most of your money invested in the largest companies in a broad market. Not necessarily the most efficient, nor the ones with the most convincing growth strategy, nor the ones that provide the portfolio balance you want, simply the largest.

So take the FTSE100 (the FTSE All Share is much the same), for every £100 you put in a tracker perhaps 35% (data from june 2011) goes into raw materials extraction - mining/oil/gas. I may like the riskier end of the market but 35% in raw materials does not seem like a sensibly balanced portfolio to me. Put that against 5% in industrials and 1 % (yes 1% !!) in technology sector shares. Would anyone constructing a portfolio choose shares in these proportions?

all valid points, but we're not talking about funds v trackers.....